With base commission rates varying from Smarkets’s industry-low 2% to 5% and more from other exchanges, learning how to calculate betting commission into odds is vital for finding the best odds, when comparing with bookmakers and other exchanges.

Calculating betting exchange commission into odds

As betting exchanges don't include a betting margin, you need to be able to calculate their commission into odds. To do this, use this simple equation:

The odds for a QPR win with 2% commission applied are 4.19 rather than 4.25, meaning your return from a £100 bet would be £419 (including stake).

How does commission affect odds

Result

Odds on exchange

2% commission

5% commission

Leeds United

2.04

2.02

1.99

Draw

3.55

3.50

3.42

Queens Park Rangers

4.25

4.19

4.09

The table above highlights how using a betting exchange that charges a higher commission than Smarkets’s 2% can impact the odds and affect your overall payout.

For instance, if you bet £100 on QPR to win using a betting exchange that charge 5% commission your return would be £409 - £10 less or 2.4% worse off.

It may not appear a huge difference, but it will soon add up to a considerable amount.

It's important to understand that Smarkets only charge commission on net profits per market, compared to some other exchanges who charge commission whether you win or not.

Calculating the betting margin on an exchange to compare with bookmakers

Now you have converted the betting exchange odds to include the commission you can calculate the true market margin.

To do this for the 1X2 game between Leeds and QPR simply use the following calculation:

(1/Home Odds) *100 + (1/Away Odds) *100 + (1/Draw Odds) *100 = Margin

Therefore the overround on Smarkets with 2% commission applied would be:

(1/ 2.02) *100 + (1/ 4.19) *100 + (1/ 3.50) *100 = 101.94%

If you were to place the bet with an exchange charging 5% commission your margin would be 103.94% or 2% more than Smarkets, while one UK high street bookmaker offered a margin of 7% for this bet in 2017.